Federal regulations drive home distilling underground and handcuff those trying to break into industry.

Apr. 8, 2013

Ross Henrickson, owner of Stillwerks, works on the copper condenser of a new still Sunday in his Fort Collins garage. After a bad motorcycle accident left him jobless and with limited mobility, Henrickson started his still business to help him keep up with his mortgage and bills. Now, Henrickson ships his creations internationally and sometimes struggles to keep up with demand. / Dawn Madura/The Coloradoan

Ross Henrickson, owner of Stillwerks, solders together the copper condenser of a new still Sunday in his Fort Collins garage. After a bad motorcycle accident left him jobless and with limited mobility, Henrickson started his still business to help him keep up with his mortgage and bills. Now Henrickson ships his creations internationally and sometimes struggles to keep up with demand. / Dawn Madura/The Coloradoan

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A baker would never open a bakery without first baking a loaf of bread. A barista could never start a coffee shop without learning how to brew a cup of coffee. And a brewer would be laughed out of town if he started a brewery without ever brewing a beer at home.

But this is exactly what distillers are forced to do because federal law prohibits home distilling.

While more craft distilleries are opening across Colorado and the country, federal regulations prevent distillers from legally distilling before obtaining a license, which requires a substantial amount of time, work and money upfront.

The regulations aren’t stopping people from making their own moonshine, though, because home distilling is thriving underground in Fort Collins and around the country.

Distilleries are on the rise, particularly in Northern Colorado with Loveland’s Dancing Pines, Overland Distillery and Spring 44. Fort Collins has two distilleries in the works — Feisty Spirits and Big Fat Pastor Spirits. Despite some of the strictest regulations in business, distilleries have nearly doubled in the past two years and continue to grow. There are 315 craft distilleries operating today versus only 50 in 2005 with a projection of more than 1,000 firms by 2021, according to Coppersea Distilling.

Colorado had 35 craft distilleries, making it one of the top five states with the most craft distilleries in the nation.

Making Moonshine

It was a scary moment for Overland Distillery owners Joe Pawelski and Amanda Pawelski in college when a knock came at the door while they were in the middle of distilling spirits at home.

Joe Pawelski peeked out the window to find police cars, fire trucks and a sheriff waiting.

“I thought I was going to prison,” he said.

The couple scrambled to hide the still Joe Pawelski built, using blankets and a trap door. While it turned out the authorities were trying to find a reported gas leak, Joe Pawelski said he is pretty sure they could tell something was up by the smell emanating from the still .

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The couple made its fair share of moonshine, which he called ethanol, in college, but never sold it, Joe Pawelski said. Amanda Pawelski noted there is a clandestine distilling population that enjoys the taboo aspect of breaking the law by mixing up a batch of “hooch” in their garage or basement.

The Pawelskis eventually went professional with their distillery but may have never made it that far had they not dabbled in home distilling.

“It’s hard to distill if you don’t have the equipment to do it,” Joe Pawelski said.

That’s where Fort Collins-based Stillwerks and Metal Crafters Co. comes in. While many craft their own homemade stills, Stillwerks owner Ross Henrickson makes and sells stills out of his garage to home distillers around the world.

“I’ve always been interested in and liked bourbon, and I’m just a sucker for shiny things,” said Henrickson, who started making stills after a debilitating motorcycle accident that left him with a pile of medical bills.

It is legal to make, sell and own a still, but it is illegal to distill in it, noted Henrickson, who sells his stills on Etsy for anywhere from $300 to $700.

Defying the stereotypical backwoods bootlegger that has been documented in the Discovery Channel show “Moonshiners,” Henrickson said the majority of his sales are to well-educated affluent middle class 30- to 50-year-old men.

“They want to try something different and have a little bit of rebel in them. ... They are just doing it for fun,” he said. “This is illegal, and the forbidden fruit appeals to a lot of people.”

Since starting the company in November, Henrickson said he has netted around $40,000 selling stills all over the world.

When asked point blank, most distillers shy away from discussing home distilling, yet they also recognize that it is a Catch-22 for the future of the growing industry.

Jamison Gulden, co-founder of Feisty Spirits, LLC., 1708 E. Lincoln Ave., knows firsthand how hard it can be to get through all the red tape that surrounds opening a distillery.

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Being Fort Collins’ first distillery, set to open this summer, Feisty braved new ground at the city, state and federal level meeting regulations so it could start distilling.

Before ever brewing a batch, craft distillers must have a location, security locks and even a recipe for their spirits that they have never distilled. The process to get a license for Feisty took nearly half a year.

While distillers can learn as much about the distilling process on paper as possible, it is illegal for them to ever practice the trade until they get their federal license.

“Can you imagine a brewery opening up by someone who has never brewed?” Gulden said. “What would the public’s expectation be? You would probably be laughed at.”

Since starting Feisty, Gulden said he has had a number of people tell him they are home distillers, leading to the theory that underground distilling is pervasive in Fort Collins.

Rob Masters, president of the Colorado Distillers Guild and Spring 44 head distiller, said there is a rather large home distillation scene underground.

Masters did not distill at home; rather, he reached his position by apprenticing with other distillers for free.

Owner Ryan Wallace said it is a struggle for distillers to make a name for themselves when they can’t legally test the product.

While Wallace deals with distillers and whiskey drinkers all the time, he said no one has mentioned home distilling to him.

The Law

Recently, nearly 100 potential distillers crammed into a small room in the Sheraton Hotel in downtown Denver during the American Distilling Institute Conference to listen to three veterans of the Alcohol and Tobacco Tax and Trade Bureau, or TTB, talk about how to qualify and operate a TTB-compliant distillery.

While a sign of the changing times, it also was a wake-up call as to what it takes to start a distillery. Former TTB agent Jim McCoy said it costs a minimum of $15,000 to get a bond to start a distillery.

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TTB agents could not be reached by deadline. The two primary reasons for the prohibition of home distilling are taxes and safety.

Masters said tax is a big issue for distillers because their excise tax is nearly five times that of brewers, paying $2.14 tax for a 750-milliliter bottle at 80 percent alcohol by volume, not including state taxes.

That’s compared to 5 cents on a 12-ounce can of beer. Homebrewers are exempt from tax for every 200 gallons brewed annually if there are two or more adults residing in the household, according to the TTB.

Then there is the safety side of home distilling. The main perception is that the “white lightning” hooch will blind people.

“You have be careful. There are ways to create ethanol that can blind people,” Masters said. “You can create nasty stuff with distillation, which you can’t with beer or wine.”

Perhaps the bigger danger is the flammability of the spirits, which could explode in a residential neighborhood. With the higher-proof spirits, the vapors produced from distilling are highly flammable, and Gulden noted something as simple as switching on a light can ignite them.

“People are not aware enough of the risks,” he said.

Penalties associated with “moonshining” include five-year felony violations related to distilled spirits, possession of an unregistered still, engaging in business of distilling without filing an application, carrying on business without having given bond, unlawful production of distilled spirits and tax fraud.

The penalties can be stiff. Whenever a person carries on the business of a distiller without having given bond, all the right, title and interest in the lot or tract of land on which the distillery is situated, including homes, shall be forfeited to the United States, according to the TTB. Fines associated with distilling at home can range from $1,000 to $10,000.

Despite the current prohibition, many believe there is a way to responsibly legalize distilling so it can fuel the distillery boom in the same manner homebrewers have fueled the craft beer industry.

Gulden said perhaps an educational class to get a home distiller’s license so people would be equipped to distill safely at home is a possibility.

Henrickson dubbed the prohibition a “crazy law” and said people should be allowed to distill at home in small quantities for personal use.

“Everything can be done responsibly,” Masters said. “I love how the homebrewing scene has helped the craft-brewing scene grow.”